Managerial Accounting

The sum of direct materials and direct labor is called _____ cost.

manufacturing

A potential benefit that is forfeited or lost when one decision is chosen over another is called a(n) _____ _____.

opportunity cost

Inventoriable costs is another term for _____ costs.

product or manufacturing

What type of cost is never relevant and should be disregarded when making decisions?

sunk costs

Manufacturing costs include ______ costs. a. direct and indirect b. only indirect c. only direct

a. direct and indirect

Factory costs such as cleaning supplies, taxes, insurance, and janitor wages are classified as ______. a. indirect labor b. manufacturing overhead c. period oats d. direct materials

b. manufacturing overhead

Nonmanufacturing costs include _____. a. insurance on plant equipment b. assembly-line worker wages c. company president's salary d. sales commissions

c, d

A(n) __blank___ ___blank___ is anything for which cost data are desired—including products, customers, plants, office locations, and departments.

cost object

Direct materials and direct labor are both ______ costs. a. nonmanufacturing b. period c. selling and administrative d. manufacturing

d. manufacturing

Costs that can be easily and conveniently traced to a specific product are called _______ costs. a. direct b. period c. indirect d. common

direct

Raw materials whose cost can be easily and conveniently traced to the finished product are _____ materials.

direct

Units that are partially complete are found in _____.

work in process

Given: Sales of $360,000, Gross Margin of $140,000, Contribution Margin of $110,000, and Total Selling & Administrative Exp. of $60,000, net income using the traditional income statement format equals _____.

Gross Margin of $140,000 - Total Selling & Admin. Exp. of $60,000 = $80,000.

A cost may be direct or indirect, depending on the cost object. True or False.

True

True or false: The finished product of one company can become raw materials for another company.

True

A type of indirect cost incurred to benefit more than one cost object is a(n) Blank______ cost. Multiple choice question. a. sunk b. common c. prime d. opportunity

b. common

The contribution approach to constructing income statements distinguishes between _____ costs.

fixed and variable

Contribution margin is _____.

sales revenue minus variable costs

Period costs _____. a. are expensed in the period incurred b. include all costs that are not product costs c. are included as part of the cost of goods d. flow through the inventory accounts

a, b

The accrual concept that costs incurred to generate a revenue are expensed in the same period the revenue is recognized is known as the _____ principle.

matching

Cost objects include _____. a. organizational subunits / departments b. anything for which cost data is desired c. anything for which revenue data is desired d. customers

a, b, and d

Other names for manufacturing overhead include: A. factory burden B. indirect manufacturing costs C. factory overhead D. prime manufacturing costs

a, b, c

Opportunity costs _____. a. should be considered in decision making b. are uncommon in decision making c. are part of traditional GAAP-based accounting records d. are benefits lost when choosing one option over another

a, d

A laptop computer manufacturer would consider the computer's processor chip to be a(n) _____ cost. a. direct material b. manufacturing overhead c. direct labor d. indirect materials

a. direct material

Indirect labor costs include _____. a. factory security guard wages b. assembly-line supervisor salary c. assembly-line worker wages d. administrative assistant salary

a. factory security wages b. assembly-line supervisor salary

A type of indirect cost incurred to benefit more than one cost object is a(n) ______ cost. a. opportunity b. common c. prime d. sunk

b. common

Costs that are incurred to support a number of cost objects but cannot be traced to them individually are known as ______ costs. a. opportunity b. common c. marginal d. sunk

b. common

Select all that apply Which of the following statements are true? a. An individual cost is either direct or indirect, regardless of the cost object. b. A direct cost is sometimes referred to as a common cost. c. A direct cost can be easily and conveniently traced to a specific cost object. d. A factory manager's salary is a direct cost of the manufacturing department.

c and d

Product costs _____. a. include all costs involved in making and selling a product b. "attach" to units of product as they are produced or purchased for resale c. are always expensed in the same period in which the related products are produced d. are also called inventoriable costs

b, d

Direct labor is also called _____ labor.

touch

Manufacturing costs include _____. a. direct materials b. selling costs c. administrative costs d. manufacturing overhead e. direct labor

a, d, e